Why Is My Electrical Bill So High?

Energy news Update Electricity Rates Increase As is mostly always the case, news coming out of public utility companies over

Energy news Update

Electricity Rates Increase

As is mostly always the case, news coming out of public utility companies over the past two weeks has been a mixed bag.

First The Good

Almost every state in the country has been given a directive by their respective Governor to freeze any shutoff notices for consumers due to the pandemic. This was a needed breath of fresh air for the millions of consumers that have been furloughed, terminated, or required to take less pay during this unprecedented event. While families across our nation struggle to put food on the table for their children, the fear of having power shut off could mean an even more tragic swell of issues for people who have been hit with financial hardship.

The swift action by state officials has eased the minds of many Americans. Despite the enormous amount of lost revenue that utilities will experience, they have complied by maintaining services for those who cannot pay and have developed payment deferral programs to help consumers to get back on their feet. This helping hand could not come at a more crucial time, as our country is still wrestling on how to get back to what we will forever refer to as “the new normal”.

Now The Bad

If you were not familiar with utility operations, you would assume that these deferral and forgiveness programs were relief for consumers that would be shouldered by the massively profitable entities that provide us energy services. You would be wrong.

Just as many states have started their march towards opening businesses across the land, utilities are behind the scenes figuring out how to recoup their stranded costs, and lost revenues. 

News Flash: They are attempting to push that burden on you, the very consumers that need as much relief as possible while we work back to a world that pose new challenges as we restart.

Within weeks of announcing these programs for energy end users, some of the biggest energy producers and providers are splashing out reports of how they as companies are suffering. Exelon, who is the largest electric parent company in the U.S., the largest utility in the U.S. and largest operator of nuclear power in the country has reported massive losses due to commercial energy users not consuming their scheduled energy allotment during these trying times. There are plans to develop a strategy to recover these losses.

Now the conversation has shifted to how utilities are going to recoup these stranded costs and lost revenues. I am not sure if you are familiar with how U.S. utilities work, but they DO NOT lose money for long before either the government steps in with subsidies, or consumers foot the bill by way of increased utility costs. For instance, in Ohio, unprofitable coal plants have been subsidized for years, and still could not keep pace with cheaper forms of generation like natural gas, and now solar and wind. Once those plants go completely offline, Ohio consumers will pay “decommissioning charges” on their bills for years to come. That money goes to bail out the generators and utilities that own them, even though they will no longer produce energy that will be consumed by end users.

Now The Shoe Drops

Last week news started dropping that many public utilities have proposed tariffs with their state to recoup their losses and stranded costs due to the pandemic by passing them on to consumers by way of rate hikes.

Duke Utilities, Indiana Power & Light, Nipsco, and the entire state utility systems in Wisconsin and Wyoming have filed proposals to phase in higher costs to their customers. Public opinion is that this is the tip of the iceberg, and that in the coming weeks more and more utilities will follow suit. Many Cooperative utilities are planning on following the lead of public entities. With this just getting started, expectations are this list of utilities could continue to grow to a utility near you.

So, what can consumers do about these tariff rollouts? Nothing really, as they will eventually come to pass. (remember earlier when I told you utilities are never left holding the bag) However there are things energy users can do to help protect themselves of these eventual rising costs.

Procure energy from a 3rd party source: By consumers reducing their supply costs though sourcing from a retail electric provider, they can combat their utilities increases, by way of cost savings on their consumption.

Explore the economics of renewable/onsite generation. With current federal tax and depreciation incentives available for consumers, there are ways to become cash-flow positive from month one, while taking control of your energy services to drive down costs.

Savings as a Service Programs: There are currently many different energy efficiency programs that allow consumers to perform measures to their building envelop that will dramatically reduce usage, and by proxy costs. These programs no longer need to be capital expenses as many can be set up with off balance sheet financing options.

Utility Cost Recovery: Probably the most justifiable response to your utility trying to kick you while you are down is to audit them. Yes, you heard right. Consumers are able to participate in programs that will audit your utility costs for electric, natural gas, water, and telecom to look for errors, overcharges, and improper taxation. This program works on a contingency basis, that requires no upfront costs, and any found monies will be split between the auditing team, and the consumer. Since 8 out of 10 commercial entities realize substantial credits and rebates, it is a no-brainer on how you can recoup funds you already paid but should not have.

If you are a commercial entity that is being adversely impacted by your utility, or would like to discuss ways you can protect your business as you find your way back to doing business as usual, shoot me a message and I would be happy to provide you additional data on your utilities plans, and discuss what options you have to combat these rising costs.


Matt Helland
Vice President
Energy Professionals

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